ABSTRACT
This study examines the procurement process in Nigeria with
a view to assessing the procurement act, as well as investigating the effects
of corruption in public procurement on the masses and practical suggested ways
of curbing corruption in our procurement process. The study also seeks to
assess different policies and regulation earlier adopted and used to curb
corruption in the system.
A broad review of literature was carried out on procurement
act, the possible ways of achieving proper implementation of the act and other
possible means of curbing corruption in Nigeria Public Procurement.
Data were collected with the aid of well-structured questionnaires
administered on researchers/construction professionals like the Architects,
Quantity Surveyors, Builders, Engineers, Estate Surveyors and other
professionals like Accountants, Financial Managers, Bankers, Lawyers and
journalists in government offices, banks, construction companies, media houses,
research institutes and consulting firms in Enugu, Anambra, Ebonyi, Imo and
Abia states of Eastern Nigeria. The data generated were further analyzed using
descriptive statistical tools such as percentages, mean averages, frequencies
and relative importance index ranking as well as comparison of results from
participants groups respectively.
In conclusion, the results and interpretation obtained
formed the basis for the conclusion drawn and recommendation given.
CHAPTER ONE
1.0 INTRODUCTION
1.1
BACKGROUND OF THE STUDY
Construction Contracts are no
more awarded because of the need of the society but motivated by greed and
shameful intention to perpetrate fraud.
We know that fraud and
corruption are international problems. They happen daily all over the world and
it is not peculiar to Nigeria. In 2001 the United Kingdom government (National
Audit Office) found that not less than 10% of the Euro 65 billion spent in the
construction industry annually is lost to fraud.
In Nigeria fraud and corruption
have reached epidemic state and Construction contracts carry a lion share of
it. While the proceeds of corruption in developed nations remains in their
countries those of Nigeria are taken out of the economic activities of the
Nation and deposited in foreign accounts thereby dealing a ‘double blow –
double tragedy’ on the country. Why are construction contracts so prone to
fraud and corruption?
Spirited efforts are being made
from different quarters to ensure that Nigeria is purged of corruption. In a
bid to rid the country of corruption, stringent measures, laws and agencies
have been set up to ensure that the system is sanitized. This gave rise to the
Public Procurement Act, which was signed into law by President Umaru Musa
Yar’Adua in 2007.
The Act became imperative
because public procurement is one of the biggest sources of government
expenditure, and is easily prone to abuse and accompanying corruption, as past
experience has shown. The procurement Act 2007 is to provide the legal and
institutional framework for the enthronement of transparency, accountability,
value for money and efficiency in the procurement of works, goods and services
in Nigeria.
The overall impact of public
procurement in governance, government perception and national development
cannot be overemphasized, because if mishandled, it can impact negatively on
the lives of ordinary Nigerians. On the other hand, if it is properly spent,
the results would be long lasting as it would tinkle down to positively affect
the welfare state of all Nigerians, especially at the grassroots.
Construction is an easy target
because of the ways contracts are administered by Governments. It is no secret
that road construction costs more to build in Nigeria than any other African
country.
The point of
call is the process involved in the contract award, procurement and the
contract administration. In all these, no element of cost control is observed
nor due process followed. It is this anomaly that made the former Minister for
works Senator Ogunlewe to cry out during the public hearing on the Procurement
bill. He said ‘“We are talking of Due Process, shouting Due Process. What is
Due Process? In the Federal Ministry of Works where I preside as the Minister,
I don’t believe there is anything that is Due Process. How can there be Due
Process when the Engineer designs the roads, estimates the costs of the roads,
selects the contractor, constructs the roads, supervises the construction,
recommends payment for works done, approves the payment, certifies the quality
and quantity of work! All these by one person! Haba! This cannot be Due
Process. Not until roles are assigned to relevant professionals like the
Quantity Surveyors, Architects, and Builders and so on to be in charge of cost
control and management of public buildings, roads and highways, and the
procurement of the necessary goods and materials in their field can there be
any Due Process in Nigeria construction industry. Fraud in Construction
contracts revolves around three major issues; namely:-
1.
Payment methods
2.
Quantity verification
3.
Quality specification and execution
It is only on construction
contracts that businesses are set up and funded for the proprietors through
advance and mobilization payments. Without any track record, a contractor can
be given more than 70% of the contract sum even before he is shown the site just
because he has procured an Advance Payment or Performance Bond that is more
than the share capital of the issuing company and for which the receiving
administrator has no respect or intention of enforcing.
The
identified five major weaknesses in the existing procurement systems in Nigeria
namely:
That Nigeria lacks a modern law
on Public Procurement and permanent oversight body to provide guidance and
monitor purchasing entities.
i)
that the Finance (Control and
Management) Act, 1958, together with the Financial Regulations which set basic
rules for managing public expenditure have gaps, deficiencies and faulty
implementation of existing regulations on procurement (e.g. lack of permanent
arrangements for control and surveillance) which create opportunities for
bribery and corruption;
ii)
that due to inflation and lack of
regular adjustments on the thresholds of the approving limits of the Tender
Boards, their authorization were constantly being eroded resulting in abuses,
prominent among which is splitting of contracts;
iii)
That there was proliferation of
tender boards which were perceived by the private sector as sources of delays
and non transparency. In addition, these tender boards appeared to have limited
mandates with powers to decide contracts de facto resting with the Permanent
Secretary and the Minister/ Commissioner;
iv)
that Customs systems and procedures
were cumbersome and major causes of delay in clearing goods, and hence a source
of corruption; and
v)
That Procurement is often carried
out by staff that substantially lacks
relevant
training.
Just as rightly put by R.F
Kennedy that ‘because we cannot see clearly the end of the road, that is no
reason for not setting out on the essential journey. On the contrary, great
change dominates the world, and unless we move with change we will become its
victims’. This assertion gives rise to the study which is carried out as a
contribution to the curbing of corruption, a menace in Nigeria’s public
procurement system in order not to be complete victim of it. The topic is
widely discussed having Nigeria as a country in mind. The report provides an
introduction to the international debate and experiences with
procurement-related corruption, as well as recommendations on anticorruption
measures to be implemented in procurement procedures.
There are
several ways to explain this persistence of corruption. The time it takes to
curb the problem may have been underestimated. There may also be a failure in
the adjustment of anticorruption strategies to local conditions. And finally,
the incentives to implement the necessary measures may be poor among
politicians benefiting from the current system. However, in countries where
corruption is a common problem it tends to disturb the market mechanisms and
impede economic development. Corruption in public procurement makes the
officials or the politicians in charge purchase goods or services from the best
briber, instead of choosing the best price-quality combination. The result may
be construction projects several times as costly as necessary, or the
acquisition of goods not actually needed.
Also the efforts of public
officials to get into position for obtaining bribes may represent a significant
cost. Gifted youth often prefer jobs in the bureaucracy instead of more
scientific professions, the allocation of public funds may be biased in favour
of capital intensive sectors at
the expense of health and education, and laws and regulations may be introduced
just in order to obtain bribes. Even worse, public sector corruption has a
pervasive impact on the poor since it reduces the funding available for social
services and distorts public choices in favour of the wealthy and powerful,
resulting in larger income differences between rich and poor. These are meant
to be corrected with the amended and Act in place. It will help to fight
corruption to a standstill, promote issue based politics, and prevent the
subversion of the legal system with financial laws and regulations respected. This
will affirms societal ethics that links the cardinal virtues of honesty,
patience and hard work coupled with innovation and real contributions to the
society and financial success.
1.3 STATEMENT
OF THE RESEARCH PROBLEM
The mischief in the law and
practice led to the enactment of the public procurement Act 2007 was the lack
of value for money-economy, as efficient and effectiveness of public
procurements were poor. Government is seen as the easiest source of wealth through
inordinate contracting, and government was not accountable to Nigerians.
The
following are seen as the problems that necessitated this study.
i.
That the financial outlay on public
procurement is higher than the value of the projects and /or goods supplied.
ii.
That there is transparent corruption
in Nigeria public procurement process.
iii.
The acts of corruption have negative
effects on the entire polity.
iv.
It is essential for reintroduction
of new value into the system.
1.3 NEED FOR STUDY
As Construction
Cost Management professionals, it is a believe onus to contribute to the reform
agenda going on in the Nation by targeting the root of corruption in Nigeria
public procurement process. It is of belief that most frauds are perpetrated
through contracts. The EFCC report has shown that most of the public contracts
are awarded without any intention of seeing to the project materializing. Some
are awarded for political patronage or to pay for electioneering cost, while others
are awarded just to pay ‘god fathers’ and ‘oil their palms’. None could be
oblivious of the determination of the present administration in its zero
tolerance level for corruption and this claim is being demonstrated in the way
some past decisions are being looked into.
Hence, sound public procurement
policies and practices are one of the essentials elements of good governance.
Good practices reduce costs and produce timely results; poor practices lead to
waste and delays and are often the cause of allegations of corruption and
government inefficiency.
The
principal hallmarks of proficient public procurement are:
Ø
Economy
Ø
Efficiency
Ø
Fairness
Ø
Reliability
Ø
Transparency and
Ø
Accountability and ethical
standards.
Economy:
Procurement is a purchasing activity whose purpose is to give the purchaser
best value for money. For complex purchases, value may imply more than just
price, for example, since quality issues also need to be addressed. Moreover,
lowest initial price may not equate to lowest cost over the operating life of
the item procured. But the basic point is the same: the ultimate purpose of
sound procurement is to obtain maximum value for money.
Efficiency:
The best public procurement is simple and swift, producing positive results
without protracted delays. In addition, efficiency implies practicality,
especially in terms of compatibility with the administrative resources and
professional capabilities of the purchasing entity and its procurement
personnel.
Fairness:
Good public procurement is impartial, consistent, and therefore reliable. It
offers all interested contractors, suppliers and consultants a level playing
field on which to compete and thereby, directly expands the purchaser’s options
and opportunities.
Transparency:
Good public procurement establishes and then maintains rules and procedures
that are accessible and unambiguous. It is not only fair, but it seen to be
fair. Accountability and Ethical Standards: Good public procurement
holds its practitioners responsible for enforcing and obeying the rules. It
makes them subject to challenge and to sanction, if appropriate, for neglecting
or bending those rules. Accountability is at once a key inducement to
individual and institutional probity, a key deterrent to collusion and
corruption, and a key prerequisite for procurement credibility. A sound
procurement system is one that combines all the above elements. The desired
impact is to inspire the confidence and willingness-to-compete of
well-qualified vendors. This directly and concretely benefits the purchasing
entity and its constituents, responsive contractor and suppliers, and donor
agencies providing project finance. Conversely, a procurement system that fails
to take the above elements stimulates hesitation to
compete, submission of inflated tenders containing a risk premium, or
submission of deflated tenders followed by delayed or defective performance.
Other direct results include collusion in bribery by frustrated or unscrupulous
vendors and purchasing entities, bad value for those entities and their
constituents, betrayal and abuse of the public trust for personal gain.
In summary, proficient public
procurement is not difficult to describe in principle or to distinguish from
its antitheses in practice. But it does require varied professional and
technical know-how to establish, as well as discipline and determination to
administer.
1.4
AIM AND OBJECTIVES
The
aim of the study is to appraise corruption in Nigeria Public Procurement The
following objectives form the pivot of the research work;
(1)
To investigate the Public
Procurement Process in place in Nigeria.
(2)
To study efforts made so far in
curbing corruption in procurement process.
(3)
To proffer solution by suggesting
ways of curbing corruption in Public Procurement Process.
1.5 RESEARCH
QUESTION
a.
Is there any form of corruption in
Nigeria Public Procurement Process?
b.
What are the factors contributing to
corruption in Nigeria Public Procurement Process?
c.
What are the effects of corruption
on Nigeria Public Procurement Process?
d.
What are the ways of curbing
corruption in public procurement?
1.6 SCOPE
OF THE STUDY
This study explores the problem
of corruption in public acquisitions of goods and services. While mainly
concentrating on the bureaucratic administration, the discussion often includes
the political level. Three aspects of procurement-related corruption have been
examined. First, problems that often arise if this type of corruption is
common.
Secondly,
the mechanisms: How is this illegal activity actually carried out? And
finally, a major concern of the study is the practical strategies to combat the
problem. This research work will focus on Public Procurement Process in Nigeria.
The research will be limited to the Public Procurement Process in Nigeria
construction Industry with a general overview of the state of corruption in the
nation. Necessary contacts and research work will focus on the South-East zone
- the commercial heart beat of Nigeria. The parties involved in procurement
would be reached for fact finding.
1.7 EXPECTED
CONTRIBUTION TO KNOWLEDGE
Knowledge
is power and this can be brought into reality through enlightenment. This
project work is expected to:
(1)
Create more awareness of the
importance of Public Procurement to National Economic development.
(2)
Encourage more attention to be paid
to Procurement Process and legislations in Nigeria.
(3)
Establish also the need for
practicing professionals to improve on and bring their services closer to the
people.
(4)
Educate the masses on the ills of
corruption to the Nation’s growth.
(5)
Furnish the policy makers the
suggested practical ways of curbing Corruption in the procurement process.
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Item Type: Project Material | Size: 112 pages | Chapters: 1-5
Format: MS Word | Delivery: Within 30Mins.
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